1139463--12/14/2010--MEDCATH

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{regulation, government, change}

{tax, income, asset}

{regulation, change, law}

{financial, litigation, operation}

{investment, property, distribution}

{personnel, key, retain}

{system, service, information}

{stock, price, operating}

We cannot predict the timing, amount or mechanics of any potential distributions to our stockholders. We may have fiduciary duties to our partners that may prevent us from acting solely in our best interests. Material decisions regarding the operations or sale of our facilities require consent of our physician and community hospital partners, which may limit our ability to take actions that we believe are in our best interest. Unfavorable or unexpected results at one of our hospitals or in one of our markets could significantly impact our consolidated operating results and the value received upon an asset disposition. We may continue to incur impairment losses on our long lived assets If the anti-kickback, physician self-referral or other fraud and abuse laws are modified, interpreted differently or if other regulatory restrictions become effective, we could incur significant civil or criminal penalties and loss of reimbursement or be required to revise or restructure aspects of our business arrangements. Reductions or changes in reimbursement from government or third-party payors could adversely impact our operating results. If we fail to comply with the extensive laws and government regulations applicable to us, we could suffer penalties or be required to make significant changes to our operations. Companies within the healthcare industry continue to be the subject of federal and state investigations. Future audits by Recovery Audit Contractors ( RAC ) could have a material adverse effect on our reported financial results. Audits by Third-party Payors could also have a material adverse effect on our reported financial results. If government laws or regulations change or the enforcement or interpretation of them change, we may be obligated to purchase some or all of the ownership interests of the physicians associated with us. Growth of self-pay patients and a deterioration in the collectability of these accounts could adversely affect our results of operations. Our hospitals and other facilities face competition for patients from other healthcare companies. We depend on our relationships with the physicians who use our facilities. A shortage of qualified nurses could affect our ability to grow and deliver quality, cost-effective care services. We rely heavily on our information systems and if our access to this technology is impaired or interrupted, or if such technology does not perform as warranted by the vendor, our business could be harmed and we may not comply with applicable laws and regulations. Uninsured risks from legal actions related to professional liability could adversely affect our cash flow and operating results. Our results of operations may be adversely affected from time to time by changes in treatment practice and new medical technologies. California state law could have a material adverse impact on our financial results or cause significant changes to our existing approach to control of patient medical information.

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1139463--12/14/2010--MEDCATH_CORP